Hi Polly, I don't exactly agree with you here that Steinhoff does not have control over Pepkor Africa. Yes agreed they only get dividends, however they can vote whoever needs to sit on the board at the AGM. And thus they have control over the assets etc.
The Pepkor group has done many things to emphasise its independence from Steinhoff, CEO Leon Lourens told Fin24 on Monday.
This includes the refinancing of the Steinhoff shareholder funding and release from related financial guarantees; the name change to Pepkor; and publishing of the 2018 audited results which confirmed that Pepkor’s accounts are above suspicion, the group said in an earlier statement.
In addition, Pepkor will now fund its own credit books for the JD Group and Capfin, and has agreed to terminate its existing commercial relationship with Century Capital (Fulcrum), in a phased approach.
Pepkor will, therefore, take control of the funding of financial services provided to Pepkor customers, and maintain the same profitability insofar as it relates to Pepkor’s financial services operations.
Steinhoff 'doesn't influence how we run our business'
"Although Steinhoff has a big share in Pepkor, it does not influence how we run our business independently.
"We disentangled ourselves from Steinhoff and there is very little left of the 'corporate noise' we encountered during the financial year," said Lourens.
"Sometimes one did not know what to expect when you got to the office in the morning, but we dealt with most of it and we now focus on the retail side of the business - which is essentially what we are, we are retailers."
He said Pepkor understood the need in the market for the group to be more open and transparent, and where possible it will try to do more of that.
Board 'more well-balanced'
"From a governance point of view, for instance, we recomposed the board and we think it is well-balanced now," he said.
He emphasised that there had never been any issues with Pepkor per se – it had all been "contamination" from Steinhoff events.
'Disentangled' from Steinhoff
Pepkor was "disentangled" from Steinhoff, he said, despite Steinhoff having a 71% share in the business.
"We are pretty much disentangled from Steinhoff now.
"We cannot downplay that Steinhoff has a 71% shareholding in our business, but from a decision-making point of view and a business point of view, we take our own decisions.
"Steinhoff only has three members out of the 12 on our board. Our board is fully independent," said Lourens.
"We learnt a lot of lessons from the Steinhoff saga. We learnt what not to do. The culture of a business is built up through a history and must be based on the right norms and values, which must be protected. We got dragged into the Steinhoff thing, but despite all of that, we still have a great culture."
He said all in all, despite all the "distractions", Pepkor had had a good year and good results, the current challenging economic environment notwithstanding. He is very positive about the future.
"In fact, we are still growing and gaining some market share and our operating profit is good, although we would have liked to have seen it doing better. We have great brands like Pep, Ackermans, Russells and Bradlows, which are trusted among SA consumers," said Lourens.
Regarding the ongoing legal battle between Pepkor and the founder and former management of Tekkie Town, Lourens said the matter would still be going to full court next year.
Given a recent interim interdict granted to Pepkor relating to certain stock which may not be sold in Mr Tekkie stores, Lourens is hopeful of a good legal outcome for Pepkor.
"Tekkie Town is trading well and has an established management team. We are happy with its performance."
